2. The Prime Minister of Nepal called on the President and the Vice-President of India. Shri S.M. Krishna, Minister of External Affairs, Shri Pranab Mukherjee, Minister of Finance, Shri P. Chidambaram, Minister of Home Affairs, Shri A. K. Antony, Minister of Defence, Smt. Sushma Swaraj, Leader of Opposition and other Indian dignitaries called on the Prime Minister of Nepal.

3. The Prime Minister of Nepal had a meeting with the Prime Minister of India followed by delegation-level talks. During the talks, the two Prime Ministers reviewed the state of bilateral relations and exchanged views on ways and means to further expand and consolidate the close, multi-faceted relations between the two countries. The talks were held in an atmosphere of utmost cordiality and warmth. The Prime Minister of India and Smt. Gursharan Kaur hosted a dinner in honour of the Prime Minister of Nepal and Mrs. Hisila Yami.

4. The Prime Minister of Nepal elucidated on the peace process and constitution drafting. He appreciated and expressed thanks to the Government and the people of India for their support and expressed hope to receive India's goodwill and understanding for Nepal's peace process and continued cooperation for its socio-economic development. The Prime Minister of Nepal also highlighted his ongoing efforts for consensus building on the peace process of Nepal. The Prime Minister of India expressed full support for efforts to build consensus on the peace process and constitution drafting to pave way for Nepal's transition to an inclusive, multiparty democracy in Nepal.

5. The two Prime Ministers directed that all the bilateral institutional mechanisms be revitalized and convened regularly. They directed early meetings of the Joint Ministerial Commission on Water Resources and Home Secretaries.

6. The Nepalese side assured that the Government of Nepal would take further measures for creating and promoting an investor-friendly and enabling business environment to encourage Indian public and private sector investments in Nepal. The two Prime Ministers directed the Inter-Governmental Committee (IGC) of Commerce Secretaries to convene at the earliest with a view to identifying ways and means of further strengthening mutually beneficial trade and investment ties between the two countries and look into all trade and transit related issues, including trade imbalance, remaining issues of Trade Treaty, Nepal's request for waiver of 4% additional customs duty, issue of fixation of additional one-time lock by Indian customs between Kolkata/Haldia Port and Nepal and operationalisation of Vishakhapatnam port for Nepal's trade. With regard to the issue of Duty Refund Procedure (DRP) under the new Treaty of Trade, the Indian side assured that the necessary notification in this regard is expected to be issued shortly.

7. The two sides directed the relevant officials to hold comprehensive review of the Rail Services Agreement at the earliest to enhance cooperation in the field of railways and explore movement of additional stream of wagons to/from Birgunj ICD in Nepal. The two sides agreed to expeditiously complete procedural requirements for operationalisation of rail transit facility through Rohanpur-Singhabad and transit between Vishakhapatnam and Nepal.

8. In response to Nepal's request for increase in the quantum of electricity export to 200 MW to cope with the power deficit during the dry season, the Indian side conveyed readiness to supply maximum electricity possible on existing transmission lines and suggested that technical experts of the two countries should meet to explore the options available for enhancing electricity trade between India and Nepal. With reference to the draft MOU on cross-border interconnection for electric power trade, the Indian side conveyed that it would expeditiously examine the draft.

9. The two sides reiterated that the open border between Nepal and India has greatly facilitated exchanges among the peoples of both countries, and that it is equally important to manage the border effectively and efficiently to control cross-border criminal activities. The two sides discussed security concerns related to the open border between the two countries. The Nepalese side assured that it would not allow its territory to be used for any activity against India and the Indian side also gave the same assurance to the Nepalese side.

10. The two Prime Ministers committed to extend all necessary support to facilitate expeditious completion of construction of roads, rail links and the Integrated Check Posts in the India-Nepal border areas.

11. The Nepalese side requested the Government of India to allow three additional inbound air routes from Janakpur, Bhairahawa and Nepalgunj in view of increased air traffic to and from Nepal and for facilitating international air service from the regional airports of Nepal in cost effective manner. The Indian side proposed a meeting of the civil aviation authorities of Nepal and India to discuss and address various issues in this sector.

12. The Prime Minister of Nepal requested the Prime Minister of India for India's assistance in implementing priority development projects in Nepal. The Indian side indicated willingness to favorably consider priority development projects in various sectors as requested by Nepal and suggested that these may be reviewed and considered in detail at a meeting of the Joint Commission at the earliest.

13. The Prime Minister of India offered to increase the ITEC slots for Nepal to 200 every year.

14. In presence of the two Prime Ministers, the Agreement on Promotion and Protection of Investments, Agreement for dollar credit line of US$ 250 million between Government of Nepal and Export-Import Bank of India and Memorandum of Understanding regarding Indian grant assistance of ` 1.875 crore for the goitre control programme in Nepal were signed.

15. The two Prime Ministers noted with satisfaction that the two sides have considered and reached agreement on the text of the Double Taxation Avoidance Agreement (DTAA) and committed to sign the DTAA at the earliest possible on completion of the respective legal procedures.

16. The two sides expressed concern at the human suffering and loss of lives and property caused by floods and inundation at the border areas during the monsoon and agreed to strengthen coordination and consultation to deal with the problem. They agreed that the Joint Ministerial Commission and Joint Commission on Water Resources should convene at the earliest and discuss the current pressing issues and identify the measures for immediate correction.

17. The two sides agreed to further promote exchange of Parliamentarians.

18. The two sides proposed establishment of an Eminent Persons Group to look into the totality of India-Nepal relations and suggest measures to further expand and consolidate the close, multi-faceted relations between the two countries. The modalities of the proposed Group would be worked out through mutual consultation at the earliest.

19. Both sides noted that the multi faceted and deep rooted relationships between the two countries needed further consolidation and expansion in a forward looking manner to better reflect the current realities.

It was in this broader context that the two Prime Ministers agreed to review, adjust and update the 1950 Treaty of Peace and Friendship and other agreements,

while giving due recognition to the special features of the bilateral relationship. A High-Level Committee at the level of Foreign Secretaries will be set up for this purpose.

20. The Prime Minister of Nepal addressed a business luncheon meeting jointly organised by ASSOCHAM, CII and FICCI and attended a programme at the Jawaharlal Nehru University.

21. The Prime Minister of Nepal also visited Dehradun and visited the State Industrial Development Corporation of Uttarkhand in Haridwar. The Hon'ble Governor of Uttarkhand hosted a lunch in honour of the Prime Minister.

22. The Prime Minister of Nepal renewed the invitation to the Prime Minister of India to pay an official visit to Nepal at an early date. The Prime Minister of India accepted it with pleasure. The dates of the visit will be decided through diplomatic channels.